Dollar gains against euro for third straight week
New York (May 24) The dollar rose Friday, notching weekly gains against the euro, yen and Australian dollar.
Sales of new single-family homes rose 6.4% in April to an annual rate of 433,000, beating economist expectations.
Housing data have become significant because of comments from Federal Reserve officials, including Fed Chairwoman Janet Yellen, about the sector’s recent weakness. Investors are closely watching economic data and language from the Fed for clues on when the central bank could begin to raise interest rates, which should boost the dollar.
“Despite the latest bump up in the headline reading, the current bias towards the housing rebound remains negative,” said Andrew Wilkinson, chief market analyst at Interactive Brokers LLC, in a note. “It seems that investors have the key economic sector in the cross hairs now that the rebound that started three years ago appears to be hitting a wall,” he said.
The ICE dollar index, which pits the greenback against six other currencies, rose to 80.374 from 80.226 late Thursday. That’s the highest level in seven weeks, pushing the index to a weekly gain of 0.4%. The WSJ Dollar Index, another gauge of dollar strength, rose to 73.16 from 73.07.
The euro fell to $1.3630 from $1.3654 late Thursday, for a weekly loss of 0.5%. That’s the third consecutive weekly loss for the euro against the dollar, driven in part by increased speculation that the European Central Bank could ease monetary policy in June.
The Ifo index, a closely watched gauge of German business sentiment, fell to 110.4 in May from 111.2 in April, missing expectations. European investors are also watching the ongoing European Parliamentary elections, which are scheduled to end May 25. Read: Europe’s continental vote will have local effects
In other trade, the British pound fell to $1.6826 from $1.6869 late Thursday, but still gained 0.1% for the week.
The dollar rose to 101.97 yen from ¥101.73. For the week, the dollar is up 0.4% against the yen. Bank of Japan Gov. Haruhiko Kuroda told The Wall Street Journal he doesn’t expect the yen to appreciate. The U.S. economy is recovering faster than the Japanese economy, which should cap further yen gains against the dollar, he said. The dollar is down 3.1% against the yen this year.
